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Bachelor Thesis, 2012
40 Pages, Grade: A
1.1. BACKGROUND OF STUDY
1.2. STATEMENT OF THE PROBLEM
1.3. RESEARCH AIMS AND OBJECTIVES
1.4. STRUCTURE OF THE REPORT
1.4.1. CASE BRIEF
1.4.2. PROBLEM STATEMENT AND ANALYSIS
1.4.3. ANALYSIS AND FINDINGS
1.4.4. PROPOSED SOLUTIONS TO PROBLEM
1.4.5. APPLICATION TO ANOTHER CASE
2. CASE BRIEF
3. PROBLEM STATEMENT AND PLAN OF ANALYSIS
3.1. STATEMENT OF PROBLEMS IN THE CASE
3.2. RELEVANT LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK
3.3. PROPOSED PLAN OF ANALYSIS
3.3.1. STRATEGIC MANAGEMENT ANALYSIS
3.3.2. INTERNATIONAL MARKET ANALYSIS
3.3.3. INFORMATION SYSTEMS ANALYSIS
3.3.4. MARKETING ANALYSIS
3.3.5. HR ANALYSIS
3.3.6. FINANCIAL ANALYSIS
3.3.7. INTERNATIONAL BUSINESS ANALYSIS
3.4. SOURCES OF DATA
4. ANALYSIS AND FINDINGS
4.2. ANALYSIS PERTAINING TO CONCEPTUAL FRAMEWORK
4.2.1. STRATEGIC MANAGEMENT ANALYSIS
4.2.2. INTERNATIONAL MARKET ANALYSIS
4.2.3. INFORMATION SYSTEMS ANALYSIS
4.2.4. MARKETING ANALYSIS
4.2.5. HR ANALYSIS
4.2.6. FINANCIAL ANALYSIS
4.2.7. INTERNATIONAL BUSINESS ANALYSIS
5. PROPOSED SOLUTIONS TO PROBLEMS
5.1. INTEGRATED DISCUSSION OF ANALYSIS
5.3. PROPOSED PLAN OF ACTION AND GANTT CHART
5.4. LIMITATION S AND SCOPE OF THE STUDY
6. APPLICATION TO ANOTHER CASE
6.1. COMPARATIVE COMPANY’S SITUATION
6.2. RECOMMENDATIONS ON COMPARATIVE COMPANY
The case at hand is about the downfall of the Four n Star Industries Private limited highlighting the major problems that the company faced and how it catered to these problems and the major reasons of the firm’s failure despite it being one of the largest Mattress brands in UK.
The study is being conducted on the issues and problems that were faced by the Five Star Industries Private Limited, a famous mattress brand which had been suffering from heavy losses owing to the company’s sales falling and competition penetrating the market, with continuously increasing day by day. The company came into being in 1966 when a carpenter and his wife took the initiative and formed this company to produce spring mattresses. In order to produce the mattresses, Gim Sin the carpenter purchased sophisticated machinery owing to the machines high productivity and quality.
However, with time, the intensity of the competition I the mattress producing industry increased and the company had to suffer from the problems of local mattress producers dominating the mattress market and thus forced the company t take corrective action. The company was highly affected since it was heavily dependent on the local dealers who now penetrated the market with their own production of mattresses. However, the company attempted to do this by increasing its product range and service level. Although the action was to improve the company’s condition, yet it further deteriorated the company’s position since the variety of product ranges which now resided in their portfolio became difficult for them to manage since the increased variety slowed the mattress production. The act of thus matching the demand with the supply of these variety of mattresses became a problem for the company and thus led to the company facing order fulfillment problems since the wide variety of products produced and the orders of these various mattresses put a heavy pressure on the company’s manufacturing operations and created difficulties in production scheduling in turn. This pressure o the manufacturing sector of the business and the problems faced by the company instigated a fear in Gim Sin of employees leaving the organization since their job has been toughening day by day due to the introduction of this wide variety of products.
The impact of increased competition on Four Star Industries Private Limited, the actions taken by the company to deal with this competition, the problems faced by the company due to these remedial actions taken and how these problems could impact the company and could be countered by the company to prevent it from suffering from any losses.
The statement contains four conditions which will be evaluated in order to come to the eventual finding of what the company must do to counter the problems it has been facing. The first statement is the evaluation of how the company had been affected by the increased competition that prevailed in the market due to the entrance of various local competitors. The second statement evaluates the major action that was taken by the organization to counter these problems faced by increased competition. Third part would help reflect the impact of the actions taken on the company highlighting the negative effects that struck the organization at the time and the last and eventual part would be evaluation of what the company must do to counter these problems with a detailed analysis of how these problems impacted the company.
The following are the aims and objectives of the research that is being conducted;
- To evaluate the impact of increased competition on Four Star Industries limited. This would help see the company’s situation that the company met at the time of this market change.
- The evaluation of the measures taken by the company to counter these problems and why these measures had been taken and under what considerations.
- What are the major impacts that these measures have brought upon the company’s performance in the market. In what ways have these measures negatively impacted the organization on the whole
- What measures could be taken by the company to counter these problems, keeping in mind that the measures taken must not lead to further more problems as had been the case before. How could the measures decided to be taken impact the organization positively with reasoning of why these measures have been recommended.
The research objectives would help us evaluate the entire situation in depth and look into the various options the company has in terms of the measures which could help the organization come out of this problem.
The report will proceed by first describing the situation that prevailed in the market at the time of the issues faced by the company due to the intense competition entrance in the market. The following headings will be included in the report.
This would involve a short description of the event with major issues and assumptions highlighted in order o help evaluate the main problems that the company faced.
This chapter would mainly focus on the explanation of the problem statement which has been mentioned above and the detailed analysis of each part of the problem statement. The chapter would include a conceptual framework on the basis of which the research will be conducted. The original problem statement has been mentioned above in the following words
“The impact of increased competition on Four Star Industries Private Limited, the actions taken by the company to deal with this competition, the problems faced by the company due to these remedial actions taken and how these problems could impact the company and could be countered by the company to prevent it from suffering from any losses.” Our research questions have thus been defined in accordance with the problem statement above and four statements need to be tested at the time, along with the company’s evaluation of the current position in market and the current position of the market itself.
This would include a detailed analysis of the entire situation at hand including first the analysis of the current situation, which would be done on the basis of SWOT analysis and then the analysis will be done based on the conceptual framework which will be established in the chapter before.
This would be the last part of the problem statement where we will be in detail discussing the solutions which could be taken by the company to avoid and remedy the situation at hand. Gantt chart will be used to explain the implementation of the plan which could help remedy the problem followed by limitations of the study.
This would involve evaluating a similar case of another company in full detail and comparing the measures they had taken with the measures which had been recommended for Four Star to implement.
The case as has been discussed above is about the company Four Star industries which faced an intense flow of competition as a result of inflow of immense amounts of local competitors which were mainly the dealers of the company in the first place. Due to this competition increase the company feared to lose their market share and was unable to come up to an appropriate solution considering its current situation had been made adverse due to the entrance of various competitors. The company attempted to remedy this problem and maintain its market share in the market by increasing the range of the products and their variety and the service level provided to customers. This increase in the product variety added to the complexity of the company’s manufacturing operations and slowed down their production since the company now had multiple orders of multiple varieties but not enough capacity to conduct multiple production, thus putting an immense pressure on the company and its manufacturing sector particularly, leading to falling efficiencies and falling sales levels. Looking at the pressure that had been imposed on the company’s manufacturing employees and other service employees built in another fear in the eyes of the owner Gim Sin. Gim Sin feared that with this pressure continuing to build on the manufacturing and its employees, it is inevitable that the employees will leave the organization, since they are not getting job satisfaction and instead are forced to producing large amounts of products and variety of their ranges. These would lead to de-motivation and make the employees disconcerted with the company with the eventual result of them leaving the organization due to the pressure built upon them by the orders taken by the company. This would eventually lead to the inability of the organization to fulfill its production targets and thus would lead the company to suffer from even greater losses than what it had been experiencing during the entrance of competition in the industry.
The company mainly stressed upon higher quality and productivity which led to the company to become of the largest mattress producing companies in the Singapore industry and thus to maintain this high level of productivity and quality the company attempted to improve their situation by increasing the variety and then service level being provided by the organization to the people being served.
The company thus faced a situation where it could not match the demand with their supply owing to the fact that their production levels were slow compared to the speed with which the demand for their products were made and the order out of certain orders were not made as a result, leading to falling demand and falling sales of the company. Thus the company made a wrong move in response to increasing competition and forecasted heavy losses in future owing to the suppositions mentioned above. Thus the scope of the study is to evaluate the entire problem which the company faced, the impact this problem had on the company’s performance and recommend solutions to how the company could effectively counter their problem which they faced in consequence of the measures taken by them.
The following section will go through the series of problems that the company faced and the various forms of analysis of these issues that will be conducted in relation to the current market conditions and the company’s condition in that market.
The major problem that the company is facing in this case is the problem of diversification. Although some might not feel that this is a problem, but for companies to expand without considering whether they have enough resources to cater to the expanding market which they will be catering to after the expansion, diversification becomes a problem.. The same was the case with Four Star Plc. who in order to accommodate to the competition and to surpass their competitors increases the range of its product portfolio worldwide, already being a multinational company. Moreover, the company made use of this measure to tackle with the competition which the company had to face with the entrance of new competitors who were in the first place the retailers of the company.
Over the past few years, various conflicts and issue like the one being experienced by the company in question have been experienced and dealt with by various companies. Owing to this fact, this section is dedicated to the discussion of various previous cases in which the company had to suffer loss and a problem due to ineffective operations or an implementation of an incorrect strategy. Our conceptual framework will be based upon the number of analysis which we will be conducting owing to the need to examine the market thoroughly so as to evaluate the impact of the wrong strategy on the company and the evaluation of the findings in accordance to the case in hand. Given below is our conceptual framework which will be evaluating the reason behind the problem that had been created.
The connection between two variables is considered which is based upon the impact of the competition on the company and the impact of the measure taken to counter and manage the competition. These two variables are the issues demand supply mismatch and the strategy of increasing the product portfolio. The moderating variables that led to the mismatch would include the intensity and emergence of competition that entered the Singapore market and the situations and the implementation of expansion strategy. Mediating variables would be the issues associated with the emergence of competition in the market and the issues created after the implementation of the expansion strategy which was adopted by the company. These issues mainly consisted of the mismatch created with the set or problems attached to it and the problem of frustrating feeling created between the employees, the problem of falling profitability of the company, the problem of increased cost since the company is losing its customers due to the inability to produce the products to meet the demand. The diagram below displays the mediating and moderating variables along with the main variables impacting this relation followed by the consequences of this relation. The eventual problem that is being evaluated here is the mismatch of the demand and supply.
illustration not visible in this excerpt
For companies competition has proven to be profitable at times yet most of the times these competitions have tarnished the company’s profitability and brought the companies down from their market leadership. In order to first understand the cases of many companies facing these adversities of competition, we need to understand what is actually meant by the term ‘Competition’. According to a research conducted by Saviotti and Krafft (2004), the term competition is all about the evolution or could be called a continuous process of improvement. According to them, competition is a process of rivalry that exists between firms and that lead to the inception of the intra-industry competitions in the form of products being launched or the marketing strategies adopted. Also this rivalry exists in the form of prices, products or services offered, improved production techniques and in terms of the information communication to the consumers in the form of marketing practices adopted by firms.
Owing to this definition of the word competition, we can relate to the levels of competition that exist between organizations in the market places. These competitions having both adverse and positive effects on the companies are a platform for organizations to grow owing to the fact that these motivate organizations to develop a differentiation point that distinguishes them from the rest of the competitors, thus enabling them to develop competitive advantages using which many organizations have sailed through the competition and succeeded in attaining the market leader position. The research of Saviotti and Krafft (2004) further stated that this trend of increased competition has prevailed over a period of time, owing to the market’s need of avoiding dominant firms and monopolistic powers to prevail in the market and thus promoted healthy running of the businesses and the market by encouraging new firms to enter the market and create competition. Owing to this theology, the framework above displays how this Four Star Plc. Faced the downturn of competition.
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